First, we want look at what Blockchain is, its applications and how it can affect the Nigerian Economic ECO-System. Before we look at the Blockchain and its applications; we must first learn about its first application – Bitcoin Cryptocurrency.
Like paper money and gold before it, bitcoin allow parties to exchange value. Unlike its predecessors, Bitcoin is digital and decentralized. For the first time in history, people can exchange value without intermediaries which translates to greater control of funds and lower fees. Although it’s often referred to as new, Bitcoin has existed since 2009 and the technology it is built on has roots going back even further. Below is a brief history of Bitcoin and Cryptocurrency.
1998 – 2009 The Pre-Bitcoin years
Although Bitcoin was the first established cryptocurrency, there had been previous attempts at creating online currencies with ledgers secured by encryption. Two examples of these were B-Money and Bit Gold, which were formulated but never fully developed.
2008 – The Mysterious Mr Nakamoto
A paper called Bitcoin – A Peer to Peer Electronic Cash System was posted to a mailing list discussion on cryptography. It was posted by someone calling themselves Satoshi Nakamoto, whose real identity remains a mystery to this day.
2009 – Bitcoin begins
The Bitcoin software is made available to the public for the first time and mining – the process through which new Bitcoins are created and transactions are recorded and verified on the blockchain – begins.
2010 – First time Bitcoin is valued
As it had never been traded, only mined, it was impossible to assign a monetary value to the units of the emerging cryptocurrency. In 2010, someone decided to sell theirs for the first time – swapping 10,000 of them for two pizzas. If the buyer had hung onto those Bitcoins, at today’s prices they would be worth more than $100 million.
2011 – Rival Cryptocurrencies emerge
As Bitcoin increases in popularity and the idea of decentralized and encrypted currencies catch on, the first alternative cryptocurrencies appear. These are sometimes known as altcoin and generally try to improve on the original Bitcoin design by offering greater speed, anonymity or some other advantage. Among the first to emerge were Namecoin and Litecoin. Currently there are over 1,000 cryptocurrencies in circulation with new ones frequently appearing.
Bitcoin price crashes -2013
Shortly after the price of one Bitcoin reaching $1,000 for the first time, the price quickly begins to decline. Many who invested money at this point would have suffered losses as the price decreased to around $300 – it would be more than two years before it reached $1,000 again.
Blockchain is one of the symbols of the digitization era we live in. Blockchain, as other new technologies, is viewed as disruptive for existing business models and will likely impact our society in various manners.
This article aims at providing the reader with a simple and synthetic understanding of the concept of Blockchain (intentionally, without getting into details of the underlying technological issues). If you still have not grasped what Blockchain is, here is your chance.
Blockchain is a secured and reliable technology, operating on a peer-to-peer basis (i.e. with connected computer systems), which is used to confidently stock and share data or list transactions. It enables to perform transactions in a relatively fast and cost effective manner. It is a distributed, transparent (but pseudo-anonymous) cryptographic ledger, deemed unforgeable, that keeps records of all transactions, without involvement of a central intermediary, each transaction being verified by the network participants. When verified, the transaction is added to a block of other verified transactions. The block is then immutably added to the distributed ledger in a linear and chronological order. This is where the term “chain” comes from. The chain may be public (e.g. Bitcoin Blockchain) or private (i.e. access limited to members of a private network). Said transactions may concern Cryptocurrencies (e.g. Bitcoin) or any other kind of digital assets or digital representations of a physical asset, so-called “tokens”.
While traditional ledgers are Centralized, meaning that the ledger holder (the central intermediary) controls the system and mediates every transaction, with the Blockchain technology, each network participant holds a copy of the ledger and participates to the approval of the transactions.
Consequently, while corrupting a “traditional” ledger implies getting to the central ledger holder (the centralized intermediary), corrupting a Blockchain would imply attacking all copies of the ledger simultaneously because of the distributed nature of the ledger. The biggest “added” value of the Blockchain technology may well refer to trust. Rather than helping you building trust, Blockchain technology makes trust irrelevant.
How Nigerian Economy can Benefit from Blockchain Technology
The Nigerian government, on the other hand, has on many occasions taken stands against trading with Cryptocurrencies. Beyond Cryptocurrencies however, adopting other applications of Blockchain Technology, if properly implemented, could help improve the Nigerian economy. Let’s take a look at a few areas where it can be applied.
Corruption is the origin of most of the challenges faced in Nigeria and Africa as a whole. Reports show that the continent looses $148 billion — 25% of Africa’s average GDP — every year to corruption. In the 2017 Open Budget Index (OBI) survey released in February, Nigeria scored 17%, ranking 90th out of 115 countries globally, and 23rd out of 38 African countries.
To address budget-related corruption, blockchain technology can be applied in the development of budget-tracking mechanisms. A blockchain-based application will save all transactions and expenditures and everyone in the network will be alerted at every update.
This will eliminate corruption and embezzlement of funds as the transaction data including transaction amount, time, account number(s), and receiver(s) will all be under public scrutiny.
Access to financial services such as banking is considered a key factor to reduce the poverty level in any economy. Unfortunately, over half of the Nigerian population still remains unbanked. Mobile money, which has driven financial inclusion in Kenya for example, still faces major challenges in Nigeria.
However, blockchain disruption in the financial sector could turn things around. Unlike banks, blockchain technology does not require a physical branch since it is operated on a distributed network. This will even save users bank and telecom charges as in the case of mobile transactions.
The idea is to create alternative financial structures, liberating Nigerians from the inefficiencies of the existing financial system.
Stellar — an open-source financial platform — took a step towards achieving this in 2016 when it partnered with Oradian to launch a blockchain-powered network that allows Nigerians in rural areas gain access to affordable direct payments.
At the time, the network reportedly served over 300,000 users mainly in rural areas across Nigeria, thus proving its viability. However, total adoption can only be achieved with integration into already existing financial models and favourable government policies.
Access to Credit Facilities
According to the World Bank’s 2017 rating on the ease of doing business, Nigeria ranked 145 among 190 countries. This is as a result of the lack of access to credit facility by the country’s micro, small, and medium scale enterprises (MSMEs) which was put at 37 million as of 2015.
These small businesses contribute immensely to economic growth through job creation. Yet, they are often constrained in accessing loans from banks and other financial institutions.
Banks and other financial institutions, including credit bureaus, on the other hand are often faced with lack of a database to access identity confirmation, availability of collateral, and creditworthiness of these small business owners and so are usually reluctant to grant them loans.
To address this issue, in 2017, the Nigerian government signed two bills — the Collateral Reporting Act and Credit Reporting Act — into law to ease credit access for MSMEs. However, the impact of the laws is still yet to be felt.
An effective ledger system like blockchain technology can be used to successfully implement these laws. Different financial institutions could save information about the financial states of their clients, including data about current loans, collaterals, interest obligations, income levels or past repayment rates. To protect privacy, customers have to authorise accessibility to their data.
Ultimately, banks can monitor customers’ financial situations and evaluate the risk and conditions of a loan more efficiently and small business owners can access more funds to expand their businesses.
The issue of the lack of a centralised database in Nigeria is a matter of national security. Without accurate data, the government cannot properly solve basic problems and monitor development goals. Nigeria is a country where data is collected and stored everywhere and there have been numerous articles and papers on the various ways this issue can be addressed.
Blockchain technology could be an effective solution. The idea is to create a ledger containing basic legal documents of every citizen with a provision of virtual identity management using blockchain.
For example, with the application of blockchain technology, almost all public services in Estonia are digitised and accessed through secure digital identities that are provided to every citizen and resident.
These e-identities will enable citizens vote securely and have access to a variety of services and rights.
Free and Fair Elections
It is no news that electoral processes in Nigeria are ridden with corrupt practices which has led citizens to completely distrust elections. Professor Attahiru Jega, former chairman of the Independent National Electoral Commission (INEC) once listed insecurity, funding, apathetic and inactive citizenry among others as some of the challenges the Nigerian electoral process faces.
To regain the citizens’ trust in elections, Blockchain Technology can be adopted. A decentralized record of all votes cast in an election kept on Blockchain ledgers cannot be altered or changed without leaving traces of tampering.
To achieve a seamless electoral process powered by Blockchain, votes would be cast using smartphones, and as thousands of votes pour in, they would be permanently recorded.
This will save people the stress of going all the way to polling booths to vote. However, since more than half of the Nigerian population still lacks Internet access, stationary devices would have to be made available in rural areas.
A pilot phase of this theory was tested in Sierra Leone during their presidential elections in February. In the first ever blockchain-verified election, each paper ballot cast in Sierra Leone’s most populous region was logged into a blockchain network for verification.
The application of blockchain technology to improve the Nigerian economy will require increased Internet penetration, and if recent projections of internet penetration are anything to go by, the Nigerian government can work towards leveraging blockchain applications as more Nigerians connect to the Internet.
Blockchain is still a relatively new technology; however, it has the potential to truly level the playing field for humanity. Many countries around the world are already exploring ways to improve their economies using its applications; Nigeria should not be left behind.
Blockchain Education and Adoption in Nigeria
As we have seen from the proceeding, Blockchain Technology holds the key to many benefits for the Nigerian economy if implemented.
It is with a rising need to adopt this technology that we, BLOCKCHAIN SOLUTIONS LIMITED in partnership with COINPREMIUMNEWS LTD in line with Hon. Solomon Adaelu motion before the Honourable House to form a committee on Blockchain technology and IOT and to invite Blockchain experts and enthusiasts to enlighten the House on the implementation of the Blockchain in Nigeria.
BLOCKCHAIN SOLUTIONS LIMITED is a wholly Nigerian company in Abuja. Blockchain Solutions Limited (BSL) was born out of a dire need to create a unique investment platform where genuine investors can increase value in their funds utilizing the novel and dynamic Financial Technology (Fintech) Industry to achieve their financial aspiration.
We are a start-up company founded and registered in Nigeria in 2017, with a global focus in the Fintech industry with the singular intention to create and multiply wealth for our clients who trust us to do so. With a solid knowledge of this industry and qualified specialists in cryptocurrency ecosystem, we operate with huge wealth of experience gathered over five years and we possess research abilities to dare say ‘‘we can grow your wealth successfully”.
Our partner COINPREMIUMNEWS is specialized in getting latest information, news and updates on Blockchain Development, Cryptocurrencies, Smart Contracts, and Tokens/ICOs to the people. Using BLOCKCHAINCODERS, COINPREMIUMNEWS aims to offer services in building Blockchains, Smart Contracts, and Decentralized Applications down to Blockchain Crowdfunding Solution using Ethereum, NEM, based Crowdfunding Platform for innovation. Moving from fantastic token design and ICO smart contracts to website deployment (ICO/Token Landing Page) and providing an all-inclusive development support for ICO.
We are using this medium to request that you assist us to get this knowledge to the masses by inviting over to present a comprehensive lecture about the Blockchain and how its implementation can improve the Nigerian economy. We also want to use this medium to appreciate all your work in service of our beloved nation Nigeria.
We believe that the knowledge of the Blockchain and its public awareness will greatly help not only the economy, but go a long way in reducing the alarming high rate of unemployment in Nigeria.